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Insurance solution for homebuy

Mortgage insurance provider Genworth claims it has the answer to the woes of the Government’s open market homebuy scheme.

It is in talks with the Department for Communities and Local Government about funding the Government’s share of the scheme with insurance rather than with taxpayers’ money.

Genworth believes it could insure the risk of homeowners defaulting in return for a premium paid by the Government. It says this could attract more lenders on to the scheme by reducing rates.

Only Halifax, Nationwide and Yorkshire Building Society are part of the scheme to help first-time buyers, where buyers raise 75 per cent of the mortgage with one of the lending trio and the Government funding the remainder.

Many experts believe rates will be higher than traditional market rates at present because of the increased risk of default.

Genworth UK managing director for MI Tammy Richardson says: “The Government could purchase mortgage insurance to help the lender. It is less expensive than what they would have contributed and less risky for them.”

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